Aussies have woken up to hundreds of dollars in their bank accounts after the government made huge changes to student loans.
On Thursday, the Australian Taxation Office issued the refunds, which averaged $400, as a result of legislation that changed indexation on student and training loans.
About $3billion will be removed from more than three million HECS-HELP loans, with the average balance of $27,000 incurring a refund of about $1,200.
The refunds are being automatically processed by the ATO.
The legislation became law last month and changed the way HECS-HELP loans are indexed.
Before the law, they were indexed in line with the inflation rate, the Consumer Price Index (CPI).
But now they are indexed in line with either the CPI or the Wage Price Index – whichever is lower.
The change was applied retrospectively for the past two financial years.
The legislation became law last month and changed the way student debts are indexed
The indexation rates went down 3.9 per cent for the 2022-2023 financial year, and 0.7 per cent for the 2023-2024 financial year.
It means people with student debts will receive a credit – and people who have paid off their debts since 2023 will get a refund.
The amount that Aussies get back will depend on how much they owed when indexation applied.
The new laws were introduced after Aussie students were hit with a massive 7.1 per cent annual indexation fee on June 1, 2023 due to an inflation spike.
It has cut the rate for that year by more than half, to 3.2 per cent.
The Albanese government has described the bill as the ‘first stage’ of its planned reforms to HECS-HELP loans.
If Mr Albanese wins the federal election next year he has also committed to wiping 20 per cent of all student loans, totalling about $16billion.
The change to the indexation system followed outrage from university graduates who were slugged with a 7.1 per cent increase on their debt in 2023.
If he wins the federal election next year, Mr Albanese has also committed to wiping 20 per cent of all student loans, totaling about $16billion
More than 200,000 Australians signed a petition calling for an overhaul to the system.
University of Sydney student Nariman Dein said she had no idea about indexation.
‘I was under the impression that I’ll go to uni, I have this huge debt but I can pay it off when I start earning enough and the amount of money I owe from my uni debt doesn’t change,’ she said.
‘But you have to pay interest rates based on where it’s at right now. It’s not even making any difference into your debt, because you’re just paying interest.
‘You think you’re paying off your debt, but you’re actually not.’
Data from comparison website Finder revealed the average HECS-HELP debt sits at $40,000 with 21 per cent owing between $40,000 and $100,000, and just over one per cent owing more than $100,000.
Those carrying the debt are also increasingly anxious about the amount they owe with 63 per cent slightly or extremely concerned about their ability to repay it, compared to 54 per cent last year.
However, 12 per cent don’t believe they’ll ever be able to fully repay the debt.
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Read more at DailyMail.co.uk